Blog: How climate action is transforming the very fabric of business

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last modified
Dec 18, 2018 03:59 PM

18 December 2018 – Karl Henrik Sundström is CEO of StoraEnso, a provider of renewable solutions in packaging, biomaterials, wood construction and paper and member of The Prince of Wales’s Corporate Leaders Group. Here he reflects on the need for governments to publically commit to net zero carbon emissions to lay down the indicators of success for businesses.

With very few aspects of life left untouched by the growing impact of climate change, combatting global warming is now everybody’s business.

The fundamental risks to industry posed by rising temperatures are causing companies to completely re-think their operations and make combatting global warming an integral aspect of business strategy.

At the same time, businesses have a responsibility to deliver the low carbon economy needed by mid-century to avoid catastrophic temperature rises, as recognised in the European Commission’s recently published 2050 long-term strategy.

The result is that we have seen accelerated moves away from a fossil-based economy, particularly in the energy field, and this is crucial to rewire the economy.

This means not only a transition away from fossil fuels but also away from all fossil-based materials. And for this to be achievable, it must be underpinned by supportive policies from governments and the EU because there is a limit to what the private sector can do alone.

Sustainable packaging is a good case study. Carbon dioxide emissions from plastic packaging in the EU alone are on course to double by 2050, which by then could represent 30 per cent of total emissions. Substituting plastic packaging offers a huge opportunity to drive down emissions.

As a renewable materials company, Stora Enso has long championed the substitution of fossil-based packaging with wood-based alternatives.

However, current discussions tend to focus on increased recycling and de-carbonised new plastic production as the main ways to reduce emissions from packaging.

These are both indispensable methods for minimizing emissions but they have their limits: recycling alone, even at optimum levels, will not sufficiently reduce emissions to prevent temperature rises above 1.5C.

This creates the space for innovation in new and alterative materials, which has the best chance of being filled when supported by public policies.

By publicly committing to carbon neutrality, governments can lay down the indicators of success for businesses. Choosing sustainable materials, whether for packaging or for construction, should be a cornerstone of the EU’s low emissions strategy by 2050.

Such a commitment would direct more investment and innovation into areas such as renewable materials because wood fibre, for example, provides a large carbon dioxide performance ad¬vantage over fossil materials like plastics.

Propelling the adoption of renewable materials with a top-down commitment to carbon neutrality would also address resource scarcity and encourage the growth of the circular low-carbon economy.

Expectations are growing of retailers and brand owners to take more responsibility for the packaging they use. And likewise, expectations of policymakers to help create the right conditions for a low-carbon economy are also on the rise.

Businesses are starting to adopt some of the many existing solutions including recycled materials, and reduced packaging. To extend this to include alternative materials, they need both to build their own knowledge and evaluate the value of different packaging solutions for their customers and the environment as well as their own brand and reputation. At Stora Enso, close to seven per cent of our sales in 2017 came from new products and services, which was almost twice compared to 2016.

The next two years will be crucial in developing a strategy that will drive down emissions to zero by 2050.

And in industry, where the investment timeframe is long, transforming businesses to address global warming will depend on long-term targets that encourage innovations and investments, and futureproof our assets.

This means developing strong, credible and appropriate 2050 strategies that are consistent with the Paris Agreement’s goals and that maximise certainty for business, investors and society as a whole.

For some time, the EU has fostered a supportive environment for businesses embracing climate action, but we need to go further if we are to shift the dial in time.

We stand ready to step up to the challenge, and we hope policymakers across Europe and beyond will provide the clear, unwavering framework within which to do so.

About the author

Karl-Henrik Sundström has been a member of the GLT since 2012. He joined the company in 2012 and has been CEO since 2014.

Karl-Henrik was Executive Vice President of Printing and Living until 2014 and CFO of the company 2012–2013. He was CFO of NXP Semiconductors 2008–2012 and prior to that he was CFO and held several managerial positions in Ericsson. Karl-Henrik is Chairman of the Board of Skogsindustrierna and member of the Board of Sustainable Energy Angels AB, Confederation of European Paper Industries (CEPI), Confederation of Swedish Enterprise and Mölnlycke Health Care AB.

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